Supermarkets are threatening the future of wine suppliers warns Sir John Hegarty

By Richard Siddle

Published: 19 September, 2014

Britain's biggest supermarkets are in danger of "screwing" wine suppliers so much the market is no longer "sustainable" was the dire warning laid down this week by advertising guru and wine producer, Sir John Hegarty.

Sir John Hegarty Sir John Hegarty: standing up for wine suppliersSupermarkets should look to work more profitably with their wine suppliers, warns Sir John

Speaking at this week's Wine & Spirit Trade Association conference Sir John Hegarty said the major supermarkets were in danger of "killing the goose that laid the golden egg" in the way it treats its wine suppliers.

Sir John, who founded the Bartle Bogle Hegarty advertising agency and has been responsible for a number of ground breaking advertising campaigns, said he worked alongside many Languedoc producers, where he owns a winery, that are struggling to make a living and were "taking all the pain and none of the gain".

It was surely short termism in the extreme for supermarkets to continue to erode margin from the suppliers they ultimate rely on to sell their wine, argued Sir John.

"If I was a retailer I would be very worried," he said. "This is not a sustainable business model. We have to find a way of rewarding the producer."

He predicted more and more producers will look to go direct and cut out the middle men "if they are not adding value". "We are seeing this in other industries as well."

Sir John claimed the country's biggest supermarket chains would be better served facing up to the brand and identity issues they face following the impact of the major discounters on the retail sector.

"I think Sainsbury's and Tesco are in big trouble," said Sir John. "Those brands need to do something radical to change."

The big issue they face, he said, is being sucked in to the middle ground that is being squeezed out of all business sectors. Sir John argued anyone trading in the dreaded middle ground was now "dead" and that the big business success stories would come from those trading in the value, discount sector or the luxury, added value sector. "There is no future in the middle market."

"The supermarkets are losing their power," claimed Sir John.

Advances in digital technology continue to turn industries and the way we behave on their heads. "We are living in an incredibly disruptive era," said Sir John.

The challenge for all businesses is to determine which market you want to be in, understand what you and your brand stands for and then work out how you can get in to "people heads" - the most valuable piece of real estate in the world , said Sir John.

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